What is Meant by Natural Capital?

Natural capital refers to the Earth's stock of natural resources and ecosystems that provide a wide range of valuable goods and services to humanity. It encompasses various elements of nature, such as forests, rivers, oceans, minerals, soil, air, and biodiversity.

Natural capital is a concept used in environmental economics and sustainability to emphasise the economic and social value of natural resources. It recognises that the environment is not just a backdrop for human activities but a fundamental component that supports and sustains life and economic activities.

The term "capital" is used to draw parallels between natural resources and human-made capital, like buildings and machinery. Similar to how human-made capital generates economic value and provides services, natural capital also generates benefits and ecosystem services that are essential for human well-being. These services include clean air and water, climate regulation, pollination, soil fertility, biodiversity preservation, and recreational opportunities.

Understanding and valuing natural capital is crucial for making informed decisions about resource management, conservation, and sustainable development. By recognising the economic value of natural resources, policymakers, businesses, and society can take into account the costs and benefits of different land uses, promote sustainable practices, and ensure the long-term health and resilience of ecosystems.